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please read the case(CASE 4.3 PHILIPS VERSUS MATSUSHITA: THE COMPETITIVE BATTLE CONTINUES) and write the answer

the shot answer question(1-9questions) will find in the PDF

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Short answers

1. Briefly summarize the benefits and risks of a company engaged as an OEM (original equipment manufacturer)

2. List both the benefits that arise from an entity’s decision to engage in localization and the shortfalls of such a decision

3. List both the benefits and obstacles posed by governments in the process of globalization

4. What are the benefits of a centralized hub structure?

5. Briefly explain whether Apple is a center for global innovation model.

6.what are some of the risks for an ebtity to engage in globalization

7.what are the different possible paths that an entity can follow to become international/global?

8.List the differences between a decentralized federation structure and a corrdinated federation?

9.List the various criteria managers use to measure distance.

Philips vs Matsushita

1. How did Philips become successful? What are its core competencies? Did it follow a particular model of internationalization?

2. At the time of the case, prepare a brief analysis of its strengths, weakness, opportunities and threats (SWOT)

3. Was it able to implement its strategic advantages in its organization?

4. Prepare a SWOT analysis of Matsushita at the time of the case

5. In part based on this analysis, how was Matsushita able to surpass Philips? What competencies gave them competitive advantage.

6. What type of strategies did Matsushita follow in its international expansion?

7. What advice would you offer to Philips? What do you consider the benefits of splitting the entity as described.

8. What advice would you offer to Matsushita? Can they successfully challenge the Koreans (LG and Samsung)?

1

CAN I PURCHASE A BMW THAT IS “MADE IN THE UNITED STATES”?

YES

BUT IS IT A GERMAN CAR?

WHAT IS THE COUNTRY OF ORIGIN OF THE CAR?

WHY DOES BMW MANUFACTURE IN THE UNITED STATES?

WHAT IS GLOBALIZATION?

THE PROCESS OF INTERNATIONAL INTEGRATION FROM THE EXCHANGE OF IDEAS, PRODUCTS AND CULTURE. ALTERNATIVELY, ONE CAN SAY “GLOBALIZATION IS ABOUT GROWING WORLDWIDE INTERCONNECTIVITY” (STEGER)

IN BUSINESS, IT IS THE EXCHANGE OF PRODUCTS AND SERVICES

THIS EXCHANGE IS FACILITATED BY (BUSINESS) ENTITIES – ENTITIES THAT MAY BE LOCAL IN NATURE OR GLOBAL IN NATURE

ENTITIES THAT ARE LOCAL WILL CONTRIBUTE TO THIS EXCHANGE BY PURCHASING OR SELLING PRODUCTS OR SERVICES

ENTITIES THAT ARE GLOBAL IN NATURE WILL CONTRIBUTE TO THIS EXCHANGE BECAUSE, IN ADDITION TO PURCHASING OR SELLING PRODUCTS INTERNATIONALLY, THEY HAVE A PHYSICAL PRESENCE IN MULTIPLE COUNTRIES THROUGH FOREIGN DIRECT INVESTMENT (FDI) OR SOME OTHER EQUITY POSITION

OTHER INTERNATIONAL ORGANIZATIONS

IN THE 1944 BRETTON WOODS CONFERENCE, THE UNITED STATES AND GREAT BRITAIN LAID THE FRAMEWORK FOR THE EXPANSION OF INTERNATIONAL ECONOMIC ACTIVITIES. IN ADDITION TO THE ESTABLISHMENT OF GATT, THE

INTERNATIONAL MONETARY FUND (IMF) AND

THE WORLD BANK

WERE ESTABLISHED.

CURRENCY EXCHANGE RATES WERE ALSO ESTABLISHED AND LINKED TO A FIXED GOLD VALUE OF THE U.S. DOLLAR

THE U.S. ABANDONED THE BRETTON WOODS CURRENCY VALUATION IN 1971

Has mercantilism returned?

CLASSICAL MERCANTILISM IS THE BELIEF THAT NATION STATES SHOULD GENERATE TRADE SURPLUSES (EXPORT MORE THAN THEY IMPORT) WHICH THEN STRENGTHEN THE NATION AND CONTRIBUTE TO THE SECURITY OF THE NATION.

TO SOME EXTENT THE SUCCESS OF GLOBALIZATION HAS FORCED NATIONS TO RECONSIDER THE APPEAL OF MERCANTILISM, SOMETHING THAT HAD GROWN OUT OF FAVOR AFTER THE SECOND WORLD WAR.

EVIDENCE OF THIS RESURGENCE CAN BE SEEN IN PROTECTIONIST POLICIES AND GREATER RESTRICTIONS ON FOREIGN DIRECT INVESTMENT (FDI). A FORM OF ECONOMIC NATIONALISM.

HAS FDI BEEN THE KEY TO A NATION’S GROWTH IN THE SECOND HALF OF THE 20TH AND FIRST DECADES OF THE 21ST CENTURIES?

WHAT IS A TRANSNATIONAL ENTITY?

AN ENTITY THAT SIMPLY EXPORTS OR IMPORTS?

AN ENTITY THAT LICENSES ITS PRODUCT(S) INTERNATIONALLY?

AN ENTITY THAT HAS A MINORITY INTEREST IN AN ENTITY ABROAD, EXERCISING LITTLE OR NO MANAGERIAL CONTROL?

ALL OF THE ABOVE ARE EXAMPLES OF INTERNATIONAL OPERATIONS BUT ARE NOT EXAMPLES OF A MULTINATIONAL OR TRANSNATIONAL ENTITY

AN ENTITY THAT HAS SIGNIFICANT DIRECT INVESTMENT IN FOREIGN COUNTRIES AND EXERCISES ACTIVE MANAGEMENT OVER THAT INVESTMENT IS A MULTINATIONAL ENTITY

TRANSNATIONAL entities

DISNEY

COCA COLA

STARBUCKS

APPLE

PROCTOR & GAMBLE

GENERAL ELECTRIC

BOEING

DELTA AIRLINES

JPMORGAN CHASE

7

GLOBAL ENTITIES (CONTINUED)

GOOGLE

AMAZON

WALMART

EXXON MOBIL

MASTERCARD

NIKE

PFIZER

NEW YORK UNIVERSITY

GLOBAL ENTITIES (CONTINUED)

SIEMENS

BAYER

AIRBUS INDUSTRIES

MAERSK

HSBC

TD BANK

H&M

ZARA

GLOBAL ENTITIES (CONTINUED)

SAMSUNG

LG INDUSTRIES

HYUNDAI

TOYOTA

MITSUBISHI

SONY

PANASONIC

FOXCONN

10

GLOBAL ENTITIES (CONTINUED)

LENOVO

HAIER

ALIBABA UNDER 2% OF E-COMMERCE REVENUE EARNED OUTSIDE OF CHINA

TENCENT UNDER 10% OF REVENUE EARNED OUTSIDE OF CHINA – GLOBAL?

BAIDU DE MINIMUS REVENUE EARNED OUTSIDE OF CHINA – GLOBAL?

BYTEDANCE

HUAWEI

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ICBC) – THE LARGEST COMMERCIAL BANK IN THE WORLD AS MEASURED BY BOTH TOTAL ASSETS AND MARKET CAPITALIZATION

integration

GLOBALIZATION IS FACILITATED BY ECONOMIC INTEGRATION, WHERE COUNTRIES BECOME INCREASINGLY LINKED TO EACH OTHER

WHAT TYPES OF ECONOMIC INTEGRATION EXIST?

FREE TRADE AGREEMENTS SUCH AS THE NORTH AMERICAN FREE TRADE AGREEMENT(NAFTA), THE DOMINICAN REPUBLIC-CENTRAL AMERICAN FREE TRADE AGREEMENT (CAFTA-DR), THE TRANS- PACIFIC PARTNERSHIP (TPP), EXCLUDING THE UNITED STATES

ECONOMIC UNIONS (THE EUROPEAN UNION)

ECONOMIC INTEGRATION

FREE TRADE AGREEMENTS

TAX-FREE FLOW OF GOODS FROM ONE PARTNER COUNTRY TO ANOTHER? YES

FREE FLOW OF LABOR? NO

FREE FLOW OF CAPITAL? NO

COMMON/SHARED CURRENCY? NO

ECONOMIC UNIONS

TAX-FREE FLOW OF GOODS FROM ONE PARTNER COUNTRY TO ANOTHER? YES

FREE FLOW OF LABOR? YES

FREE FLOW OF CAPITAL? YES

COMMON/SHARED CURRENCY? MAYBE

Regulation of trade

PRIMARY ORGANIZATION THAT OVERSEES TRADE IS THE WORLD TRADE ORGANIZATION (WTO), ESTABLISHED IN 1995 AS THE SUCCESSOR TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT). GOAL OF WTO IS ELIMINATE BARRIERS TO AND PROMOTE FREE TRADE

CAN ACT AS JUDGE AND JURY IN TRADE DISPUTES

SOVEREIGN NATIONS CAN IMPOSE MEASURES TO PROTECT AGAINST UNFAIR TRADE PRACTICES. HOWEVER THE WTO CAN DECIDE IF THESE MEASURES ARE FAIR

WHAT ARE THE VARIOUS FORMS OF INTERNATIONAL TRADE AND GLOBALIZATION?

MERCHANDISE IMPORTS AND EXPORTS – TANGIBLE GOODS THAT ARE SENT INTO OUR OUT OF A COUNTRY. OFTEN REFERRED TO AS VISIBLE IMPORTS AND EXPORTS. BASED ON THE TABLE BELOW, FOR THE MONTH OF NOVEMBER, 2020 THE U.S. HAS A TRADE DEFICIT AS IT IMPORTS MORE GOODS THAN IT EXPORTS

EXPORTSIMPORTS
$184.2 BILLIOIN$252.3 BILLION

Forms of international trade and globalization

SERVICE IMPORTS AND EXPORTS – EARNINGS THAT ARE DERIVED FROM THE SALE OF EDUCATION, TRANSPORTATION, TOURISM, BANKING AND PROFESSIONAL (ACCOUNTING, ARCHITECTURAL) SERVICES. FOR THE MONTH OF NOVEMBER, THE UNITED STATES HAS A TRADE DEFICIT OR SURPLUS IN SERVICES?

SURPLUS

EXPORTSIMPORTS
$56.5 BILLION$38.2 BILLION

Reasons to internationalize

TO SECURE RAW MATERIALS/COMPONENTS – SECURE KEY SUPPLIES – MOTIVATION MAY BE TO SECURE AT LOWER COST THAN ON THE DOMESTIC MARKET OR NOT AVAILABLE ON THE DOMESTIC MARKET

TO SELL IN NEW MARKETS – MARKET SEEKING – EXPORT OF PRODUCT(S) PREVIOUSLY SOLD SIMPLY ON DOMESTIC MARKET – NEW CUSTOMERS AND SMOOTHS OUT CYCLICAL SALES – WHIRLPOOL SELLS AIR CONDITIONERS IN THE U.S. AND HAS ONE SELLING SEASON. IF IT EXPORTS TO SOUTH AMERICA IT NOW HAS TWO SELLING SEASONS

TO SECURE LESS EXPENSIVE PRODUCTION – LOW COST FACTORS OF PRODUCTION – LESS EXPENSIVE LABOR COSTS CREATED OPPORTUNITIES TO MANUFACTURE OUTSIDE OF THE MARKET IT WAS SELLING IN

TO SECURE INFORMATION – GLOBAL SCANNING AND LEARNING CAPABILITY – OVERSEAS CUSTOMERS/SUPPLIERS ALSO BECAME A SOURCE OF INFORMATION

TO SECURE COMPETITIVE POSITIONING – COMPETITIVE POSITIONING – WHERE AN ENTITY UTILIZES ITS STRENGTH IN ONE (PROTECTED) MARKET TO SUPPORT ACTIVITIES IN ANOTHER MARKET

Prerequisites and next steps

DOES THE ENTITY HAVE A COMPETITIVE ADVANTAGE? IN PRODUCTION, MARKETING, DISTRIBUTION? HOW DOES IT COMPETE IN THE FOREIGN MARKET WHERE THESE ADVANTAGES MAY BE INSUFFICIENT?

DOES IT HAVE THE ORGANIZATIONAL CAPABILITY TO LEVERAGE ITS STRENGTHS?

PROCESS

INCREMENTAL – STEP-BY-STEP

VS

IMMEDIATE INTERNATIONALIZATION VIA ACQUISITIONS

VS

BORN GLOBAL

MENTALITY

INTERNATIONAL – (INTERNATIONAL) PRODUCT LIFE CYCLE. ENTITIES VIEW INTERNATIONAL OPERATIONS/SALES AS SIMPLY AN ADDITION TO THEIR LOCAL BUSINESS

MULTINATIONAL – ENTITIES RECOGNIZE THE IMPORTANCE OF INTERNATIONAL OPERATIONS AND BEGIN TO “LOCALIZE” – RESPOND TO THE NEEDS OF THE LOCAL/FOREIGN MARKET

GLOBAL – BECAUSE OF THE COST OF LOCALIZATION, COMPANIES ATTEMPT TO DEVELOP ONE PRODUCT THAT MEETS GLOBAL NEEDS/TASTES. STANDARDIZATION.

TRANSNATIONAL – A REJECTION OF THE EITHER MUTLINATIONAL OR GLOBAL APPROACH. AN ATTEMPT TO RESPOND TO LOCAL NEEEDS OF A MULTINATIONAL ENTITY WHILE MAINTAINING SCALE OF A GLOBAL ENTITY

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